Hartmarx adopts a more youthful look

Best known through its 125-year history as a suitmaker, Hartmarx Corp. has been dropping cheaper lines to focus on luxury products. But that hasn't stopped the Chicago company from expanding its blue jean business.

Hartmarx raised eyebrows two years ago with the $21-million acquisition of womenswear denim specialist Simply Blue Inc., marking its first big entry into the denim market. On Aug. 16, Hartmarx took the plunge into men's jeans with the acquisition of Monarchy LLC. Hartmarx paid about $12 million in cash for the closely held Los Angeles firm, which had revenue last year of $20 million.

While Hart Schaffner Marx suits are sold mostly to businessmen 40 years old and up, Monarchy jeans, under owners Eric and Henry Kim, are sold for $200 each to a young audience craving the "L.A. look."

"Monarchy is for guys under the age of 35 who want their jeans roughed up in a certain casual way and paired with a T-shirt," says Daniel Kogan, owner of two retail shops called Fusion in Philadelphia, which has never carried Hartmarx brands. "Monarchy ranks among the top three brands we sell right now. It's very hot for us."

GOING CASUAL

The Monarchy acquisition caught some Hartmarx observers by surprise. The company has made a series of deals since 2001 on the womenswear side, more than doubling sales of women's products in the process to $118.2 million, or 24% of overall revenue, last year. In the same span, menswear sales declined 8% to $479.7 million.

"Womenswear is a larger industry, and by definition it has more companies and more acquisition opportunities," says Hartmarx CEO Homi B. Patel. "That's one reason we've done more deals there."

Mr. Patel is seeking more youthful customers on other fronts. He's introduced a bohemian offshoot to the conservative Hickey Freeman label called hickey and aimed at the under-35 shopper. The first corporate-owned hickey boutique will open in New York this fall.

"If that hickey store is successful, then there is a good chance we'll open more hickey shops elsewhere, including Chicago," Mr. Patel says. "We're experimenting with fashion-forward apparel as we seek out a younger audience."

In Chicago, Hartmarx also plans a full-scale Hickey Freeman boutique on Oak Street in Chicago next spring. It already has two in Manhattan and will open one in San Francisco this month.

Waning suit sales are blamed for a falloff in revenue at Hartmarx. In the six months ended May 31, sales fell 7% to $276.0 million; earnings dived 69% to $2.0 million, or 5 cents per diluted share.

Gary Giblen, executive vice-president with New York brokerage house Goldsmith & Harris Inc., expects Hartmarx to seek more casual brands. "It makes sense for the company to go where the growth is, and it isn't in men's suits, an industry that's been flat at best."